Biden administration tries again to relieve student debt

President Joe Biden’s administration is taking another crack at student debt relief. It proposed a rules change under an existing higher education law that would give some borrowers a break on interest charges. The administration hopes this plan will be more durable against legal challenges.

This latest effort would waive some of the interest accrued by a few narrow groups of student borrowers, but could still bring relief to some 30 million people.

“These are folks who have been really crushed by runaway interest,” and now owe more than when they first started paying off their loans, said Aissa Canchola Bañez, policy director with the Student Borrower Protection Center.

It also applies to “borrowers who’ve been stuck in repayment for over 20 years,” she said — groups that might never dig their way out of debt without help.

The plan comes after Biden’s attempt at broader debt relief was struck down by the U.S. Supreme Court and while his administration’s income-driven repayment plan is stalled on appeal.

“It’s another bite at the apple, essentially,” said Cary Coglianese, a law professor at the University of Pennsylvania.

This time around, he said that the administration is going the regulatory route, eyeing statutory rules changes to waive accrued interest.

But “the administration knows they’ll be challenged in court — no one would expect otherwise,” he said.

And while the new plan addresses some of the old one’s legal vulnerabilities, Coglianese said that federal judges could still strike it down on grounds that the White House is acting outside its authority.

“So it’s a risky strategy,” he said. That’s likely to take the debt relief question back to the U.S. Supreme Court.

Without fundamental changes to the student debt system, “it’s like it’s groundhog day,” remarked Nick Hillman, an expert on student loan policy at the University of Wisconsin Madison.

And while these policies are in limbo, so are millions of Americans’ financial futures.

“I think there’s a lot of anxiety among borrowers who are waiting to see when the other shoe is going to drop,” Hillman said.

Most eligible borrowers shouldn’t trust debt relief until it hits their accounts, he argued.